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Even as the nation debates on ways to make life better for women, corporate India has got an opportunity in the new Companies Bill to do its bit for them. The Bill, passed in the Lok Sabha last week, and expected to be passed in the Rajya Sabha early next year, makes it mandatory for certain companies to have women directors.
Once the Bill becomes law, the number of women on corporate boards is likely to increase dramatically, according to experts. Right now, the number is at five per cent. According to the Bombay Stock Exchange (BSE), of the 16,872 directors on the board of 2,865 companies, only 928, or 5.53 per cent, are women.
Even among large companies, the number of women on board is minimal. At least 24 of the top-50 listed firms that form the Nifty index do not have a single woman director, according to an analysis of board composition by Stakeholders Empowerment Services (SES).
Some of the top firms without a woman in board include Reliance Industries, ITC, Reliance Infrastructure, Tata Motors, Tata Power and Larsen & Toubro. IT majors TCS and Wipro also have an all-men board. Public sector companies did better with Punjab National Bank, Bank of Baroda, BHEL, Powergrid, ONGC, GAIL and Coal India having women directors. The State Bank of India, NTPC and SAIL are the Nifty PSUs with all-men boards, according to data collated by SES.
In the current regulatory framework, there is no requirement for companies to have women directors. However, Clause 149 (1) of the new Bill proposes that at least one woman director should be on the board of companies.
The clause says: "Every company shall have a Board of Directors consisting of individuals as directors and shall have - (a) a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of 15 directors: provided that a company may appoint more than 15 directors after passing a special resolution, provided further that such class or classes of companies as may be prescribed shall have at least one woman director."
While the exact number of women required can be calculated only when the ministry defines the "class or classes of companies", it is expected that a majority of listed companies will be covered by this provision. The challenge then may be to identify enough women for fulfilling the mandatory criteria.
According to Primedirectors.com, which runs a database of professionals available to be appointed as directors, out of 15,378 professionals whose records it maintains, only 437 (2.84 per cent) are women.
"It might happen that many would strictly follow the words of the provision, and not its purpose or spirit. That is, companies will comply with the law and appoint a single woman director and not more than that.
Whether Indian women on the board would be able to play the role of director as intended by the law or will just be sitting at home and playing the role of director on papers remains to be seen. Another possibility might be that with the non availability of such female members, companies may fill up the position with relatives of directors and the promoters," said a senior official from Corporate Professionals.